The European Union Artificial Intelligence Act (EU AI Act) is the world's first comprehensive legal framework for AI. As its phases become fully enforceable, it is vital that Cypriot companies understand their roles—whether they are developers or simply users of AI tools.

Understanding the Risk Categories

The Act classifies AI systems based on the risk they pose to safety and fundamental rights:

• Unacceptable Risk: Systems that manipulate behavior or perform social scoring (banned).
• High Risk: Systems used in hiring, critical infrastructure, law enforcement, or education (subject to strict compliance audits).
• Limited Risk: Generative systems like chatbots (must satisfy basic transparency obligations, informing users they are talking to AI).

Action Plan for Cypriot SMEs

Conduct an internal audit of all software tools using AI. Ensure that data privacy practices (GDPR) are aligned, and verify that vendors supply compliant systems.